Douglin v. GreatBanc Trust Co.
115 F. Supp. 3d 404
S.D.N.Y.2015Background
- Plaintiffs are home health aides who participated in the People Care ESOP on Feb. 1, 2008 or thereafter; they allege GreatBanc (ESOP trustee) breached ERISA fiduciary duties and engaged in prohibited transactions when it caused the ESOP to buy 100% of People Care in Feb. 2008 for $80 million, after which the company’s value fell.
- Plaintiffs seek class certification, declarations of breach and invalidity of any indemnification, injunctive relief (including removal of GreatBanc as trustee), restitution/surcharge/disgorgement to the ESOP, and fees and interest.
- Plaintiffs moved for class certification under Fed. R. Civ. P. 23; GreatBanc did not oppose the motion.
- Magistrate Judge Dolinger recommended granting certification and appointing class counsel; no objections were filed to the R&R and the district court adopted it.
- The proposed class comprises all persons who were participants in the People Care ESOP on Feb. 1, 2008 or at any time thereafter, excluding selling shareholders, officers and directors of People Care and their representatives.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rule 23(a) prerequisites are met (numerosity, commonality, typicality, adequacy) | Class has >5,000 members; claims arise from same fiduciary transaction and common injury; named plaintiffs typical and counsel adequate | No opposition raised | Court: 23(a) satisfied (numerosity, commonality, typicality, adequacy) |
| Proper class type under Rule 23(b) | Class fits (b)(1) and alternatively (b)(2) because fiduciary breach affects plan as whole and declaratory/injunctive relief applies class-wide | No opposition; potential concern that monetary relief is individual and might preclude (b)(2) certification | Court: Certify under Rule 23(b)(1); (b)(2) also permissible because monetary relief seeks plan-wide compensation, not individualized awards |
| Appointment of class counsel under Rule 23(g) | Proposed counsel have relevant ERISA/class-action experience and resources | No opposition | Court: Appoint plaintiffs’ counsel as class counsel |
| Whether mandatory (no opt-out) class is appropriate given potential monetary claims | Plaintiffs: relief will inure to ESOP as a whole and not require individualized monetary adjudications | Implicitly: concern about due process if individualized monetary relief dominates | Court: Mandatory class appropriate because breach-of-fiduciary ERISA claims are paradigmatic (b)(1) and monetary relief here is not individualized |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (commonality requires a common injury across the class)
- Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) (discusses mandatory classes under Rule 23(b)(1))
- Myers v. Hertz Corp., 624 F.3d 537 (2d Cir. 2010) (plaintiff bears burden to prove Rule 23 requirements by preponderance)
- In re Initial Public Offerings Sec. Litig., 471 F.3d 24 (2d Cir. 2006) (rigorous analysis required for class certification)
- Amara v. CIGNA Corp., 775 F.3d 510 (2d Cir. 2014) (limits of (b)(2) certification where monetary relief may be individualized)
- In re Polaroid ERISA Litig., 240 F.R.D. 65 (S.D.N.Y. 2006) (ERISA breach-of-fiduciary claims well-suited for Rule 23(b)(1) certification)